Answer the following statement(s) true (T) or false (F)
1. A Pigou tax forces car manufacturers to internalize the cost of pollution.
2. Cap and Trade is so named because the government puts a “cap” on the amount of exports that domestic firms are allowed to “trade” with foreign nations.
3. A Cap and Trade system is more prone to error than a Pigou tax.
4. Pigou taxes are unnecessary in the presence of transaction costs.
5. Pigovian analysis indicates that a subsidy should be awarded when economic activity creates social benefits.
1. True
2. False
3. True
4. False
5. True
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In the 1980s, banks __________ the amount of highly speculative loans they were holding due to __________ deposit rates
A) increased; rising B) increased; falling C) decreasing; rising D) decreased; falling
If the price of gasoline increases from $2.50 per gallon to $3
00 per gallon and the quantity demanded goes down from 120 million gallons per week to 115 million gallons per week, the absolute value of price elasticity of demand in that price range is approximately A) 0.23. B) 4.35. C) 0.93. D) 2.34.
Serena purchased 10 shares of GLC, Inc stock for $200 per share; one year later she sold the 10 shares for $220 a share. Over the year, the price level increased from 135.0 to 143.1 . The tax rate on capital gains is 50 percent. If the capital gains tax is on nominal gains, how much tax does Serena pay on her gain?
a. $90 b. $95 c. $100 d. None of the above is correct.
Which of the following will cause the demand curve for bottled water to shift right, if bottled water is a normal good?
A. a decline in population B. a fall in average incomes of bottled water consumers C. a successful advertising campaign linking bottled water to lower cholesterol D. a fall in the price of bottled water